We're definitely into long term investing, but some companies are simply bad investments over any time frame. We really hate to see fellow investors lose their hard-earned money. Imagine if you held Jiangsu Zhongli Group Co.,Ltd (SZSE:002309) for half a decade as the share price tanked 70%. And it's not just long term holders hurting, because the stock is down 57% in the last year. Shareholders have had an even rougher run lately, with the share price down 39% in the last 90 days. Of course, this share price action may well have been influenced by the 17% decline in the broader market, throughout the period.

After losing 21% this past week, it's worth investigating the company's fundamentals to see what we can infer from past performance.

Jiangsu Zhongli GroupLtd isn't currently profitable, so most analysts would look to revenue growth to get an idea of how fast the underlying business is growing. Shareholders of unprofitable companies usually expect strong revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.

In the last five years Jiangsu Zhongli GroupLtd saw its revenue shrink by 19% per year. That's definitely a weaker result than most pre-profit companies report. So it's not that strange that the share price dropped 11% per year in that period. This kind of price performance makes us very wary, especially when combined with falling revenue. Of course, the poor performance could mean the market has been too severe selling down. That can happen.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

Take a more thorough look at Jiangsu Zhongli GroupLtd's financial health with this free report on its balance sheet.

A Different Perspective

We regret to report that Jiangsu Zhongli GroupLtd shareholders are down 57% for the year. Unfortunately, that's worse than the broader market decline of 26%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 11% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider risks, for instance. Every company has them, and we've spotted 1 warning sign for Jiangsu Zhongli GroupLtd you should know about.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Chinese exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.